One of the best ways to make sizable profits in the stock market is to find those companies that are undervalued.
This means their share price is much less than what analysts believe it should be.
When market conditions are right and a company is on solid footing, the potential for gains is there. Remember, though, it may take time for those gains to be realized.
With enough patience and the right timing, buying currently undervalued stocks can pay dividends (literally and figuratively) in the future.
Here are four undervalued stocks to buy right now.
1. Cisco Systems
Market capitalization: $181 billion
Annual dividend yield: 3.18%
Cisco Systems Inc. (Nasdaq: CSCO) is a company on the verge of big upswings, especially when the 5G revolution finally comes into play.
The company provides hardware and software designed to protect connections and networks worldwide.
From late-2018 to June 2019, Cisco shares jumped 43%. Like other tech stocks, they suffered push back into 2019, and the market fall in late February pushed shares down further after an early year comeback.
However, Cisco is currently trading at 24.6% of its consensus price target of $53.21, meaning it has a lot of room to run and profits to provide.
Its dividend yield has also grown steadily over time. From April 2017 to October 2019, the dividend yield for Cisco jumped 28.9%. Cisco’s latest dividend payment was $0.35 per share in January 2020.
Cisco was also one of our six 5G dividend stocks to buy now.
The nice dividend coupled with the strong potential for added share growth makes Cisco Systems one of our four undervalued stocks to buy right now.
2. Baidu Inc.
Market capitalization: $43 billion
Annual dividend yield: 0.00%
Google has made early investors a ton of money over the years. Its Chinese equivalent is Baidu Inc. (Nasdaq: BIDU).
The company operates Baidu, a Chinese internet search engine where people can find news, information, images and, well, just about everything else we in the United States use Google for (that of course hasn’t been censored by the Chinese government).
Baidu is the most popular website in China and the fourth-most popular website globally. Oh, and Baidu was also one of our artificial intelligence stocks to watch.
Fundamentally, analysts are high on Baidu — especially once the coronavirus scare is contained. It’s currently trading at more than 750% its price target. Analysts have that target at more than $1,000 per share.
That’s a massive potential upswing for any investor looking to make big gains on the company.
But remember, those gains won’t be realized until the Chinese market stabilizes from the coronavirus. When it does, look out for Baidu.
Because it feels excessively underpriced, Baidu Inc. is one of our four undervalued stocks to buy right now.
3. Alibaba Group Holding
Market capitalization: $523 billion
Annual dividend yield: 0.00%
Another Chinese company waiting on the subsidence of the coronavirus is e-commerce giant Alibaba Group Holding (NYSE: BABA).
This Chinese-based online retailer (the Chinese Amazon, basically) was a strong performer in 2019 and looks to keep that trend going in 2020 and beyond.
While having a strong presence in China, Alibaba is expanding its footprint across Asia and the globe, putting it squarely in a growth market.
Additionally, the company’s cloud segment continues to grow at a rapid pace — nearly 65% in its most recent quarter. Alibaba was recently named one of our stocks to buy and hold for 2020.
Just like Baidu, Alibaba is trading at more than 750% of its price target. Analysts have that target set at more than $1,800 per share while Alibaba is priced at just above $200.
The growth potential here is large. But, also like Baidu, Alibaba won’t see significant jumps until after the coronavirus is contained and the Chinese market gets back to normal.
The large potential margin for growth makes Alibaba Group Holding one of our four undervalued stocks to buy right now.
4. Exxon Mobil Corp.
Market capitalization: $229 billion
Annual dividend yield: 6.17%
Because it’s in the energy sector, Exxon Mobil Corp. (NYSE: XOM) can be a volatile stock to own.
It is the largest publicly traded international energy company that includes oil and natural gas production and exploration. Exxon also manufactures and markets petrochemical products like polyethylene plastics.
Recent issues with oil supply have pushed Exxon Mobile near its 52-week low of $52 per share.
But fundamentally, that means shares have a chance to really take off once global fears like the coronavirus calm.
Exxon is trading at 34.7% of its price target, which is set at $72.45 per share. That leaves the potential for a $20-per-share gain over time.
If that seems a little low, a sizable advantage to owning Exxon Mobil stock is the dividend yield. At last glance, that yield was around 6.17%. Its last dividend payment was $0.87 per share, which can offset some of the market volatility.
That dividend yield and a potential 35% upswing makes Exxon Mobil one of our four undervalued stocks to buy right now.
Here you have a mix of stocks with a lot of growth potential coupled with those with solid dividend yield — both with the potential to make strong gains in the long run.
Remember, with these stocks, the potential upswing in share price won’t happen tomorrow. It may not happen even next month. So if you choose to invest in any or all of these stocks, do your due diligence and be patient.
That’s why these are our four undervalued stocks to buy right now.